The CBIC issued Clarification vide Circular No. 244/01/2025-GST dated 28.01.2025, clarifying the GST treatment for specific insurance-related transactions and provides a retrospective regularization for GST compliance.
The Clarification provides as under:
A. Inclusion in Schedule III of CGST Act: Earlier, through the Finance (No. 2) Act, 2024 and came into force on 01.11.2024 vide Notification No. 17/2024-Central Tax dated 27.09.2024.
The following activities or transactions which shall be treated neither as a supply of goods nor as a supply of services:
- Apportionment of Co-Insurance Premium: This activity is excluded from GST, provided the lead insurer pays GST on the entire premium amount received from the insured.
- Ceding or Reinsurance Commission: Insurer-to-reinsurer transactions involving ceding commissions (or reinsurance commissions) deducted from reinsurance premiums are excluded from GST, provided, the reinsurer pays GST on the gross reinsurance premium (inclusive of the ceding commission) received from the insurer.
B. Retrospective Regularization: The GST Council in 53rd Meeting recommended and approved the regularization of GST payments for the above activities for the past period (i.e., from 01.07.2017 to 31.10.2024) on an ‘as is where is' basis.
This means:
- Past GST compliance and payments made for these transactions are deemed valid.
- Any procedural lapses or technical deviations during this period will not be penalized.
The Complete Circular can be accessed at https://taxo.online/wp-content/uploads/2025/01/cir-244012025-cgst.pdf
